Car scrappage helps to ease industry woes

The Government's car-scrappage scheme has helped slow the rate of decline in car production, a leading industry body said today.

Slowing up: The rate of car production decline is easing

Although the monthly production figures for July are down 17.9% on the same period last year, this is the smallest monthly decline this year, according to figures from the Society of Motor Manufacturers and Traders (SMMT).

A total of 107,635 cars were made in the UK in July of this year – the slowest rate of decline since September 2008.

Industry experts say the new scrappage scheme is helping to ease the slow-down.

The 'bangers-for-cash' scheme allows motorists to trade in cars more than 10 years old in return for a £2,000 subsidy on a new model.

The aim of the scheme was to kickstart sales of new cars following a slowdown in the market.

Car production for the year so far is down 45.8% on the same period in 2008, reflecting the manufacturing cutbacks by car companies earlier this year.

The figures from the SMMT also show that production of commercial vehicles was down almost 60% in July.

SMMT chief executive Paul Everitt said today: 'The slowdown in the rate of decline of UK car production reflects the impact of the scrappage incentive schemes in place across Europe.

'The UK motor industry is starting to stabilise but remains fragile. Industry needs the Government to deliver support through the automotive assistance programme and encourage banks to provide access to much needed finance and credit.'

He added: 'The CV market is suffering from depressed demand across Europe. This continues to affect the level of CV production.

'Furthermore, high stock levels mean that vehicle production may not recover as fast as the market.'